Things to Avoid While Purchasing a Home

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Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. There are still a few major hurdles to jump before closing. We have listed some things below we suggest you avoid when waiting for your loan to close.

Don't buy luxury items. You may be tempted to buy that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or vacations until closing. Your lender may send up red flags if you purchase new electronics on your credit cards in the middle of your loan process. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.

Don't go on a job search. Stability in your career history is a good thing to lending institutions. Finding a new career (particularly one with a bigger salary) may not change your ability to qualify for a mortgage loan. However, finding a new job in the middle of the loan process might affect whether or not you are approved.

Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will probably be studied as the lender considers your mortgage application. Your lending institution looks for a consistent flow of your funds over the pay period, in the interest of avoiding fraud. Even for practical purposes, moving around funds or switching banks could make it harder for the lending institution to verify your account history.

Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the deal closes. The FSBO seller may not know that these good faith funds should be used for your expenses upon closing. It's wise to put the funds into a trust account, or get an attorney to hold them until the deal closes. The contract should dictate to whom the money goes if the transaction falls through.

Integrated Financial Solutions, LLC can answer questions about these "Don'ts" and many others. Give us a call: 410.461.4043.